Toyota has a massive recall and for all of us in automotive marketing this means an incredible case study to understand volatility of markets, how fast consumers’ perceptions can change and how a dominant brand can influence the whole market place.

First of all, when the recall started, I was surprised that Toyota themselves made this into a trust issue. The message was basically, sorry we didn’t live up to the trust you gave us but we’ll fix the problems. I thought an approach of “Some of our vehicles have safety problems but with Toyota these problems are in good hands as we’ll fix the problem and make sure you’ll drive in safe cars again.”. Safety is easier to fix than trust!

Ok, this was before I knew that the first recall would be followed by a second, a third and now even a fourth. Obviously, there was no way around this; having to recall four times for problems that seem unrelated is massively going to damage the image of Toyota. I don’t think anybody can now predict  the amount of damage. If I look at our own M3 study (M3 Automotive from 2009) and looking at the medium/large car segment, 68% of consumers think Toyota performs well on making reliable cars, 66% trust Toyota as a manufacturer and 56% believes Toyota scores well on safety. Compare this with, for example, the largest Detroit brand Ford: 30% for reliability, 36% for trust and 30% for safety. Summary: trust, reliability & safety are traits that define Toyota as a brand.

So what will happen now that Toyota brand essence is being shaken. How low can the perceptions of trust, reliability and safety drop? Will these percentages drop to the level of the average car, will it remain higher as a result of decades of building equity or will it drop even lower? I don’t think I’ve ever seen such a case that we can see how far such a strong brand can fall. The future will tell.

But now something that I think is even more interesting. How will the good shake Toyota is getting, shake the automotive industry in general. Will consumers start to distrust the other big brands or brands they associate closely with Toyota (e.g. Honda)? Will consumers start to distrust hybrids or cars with many electronic features? Will this grow the second hand market (I’d rather drive a car that hasn’t accidently accelerated in at least five years)? Etc.

With our M3 study we can project where customers moving away from Toyota are likely to land and we can even help these brands to leverage their messaging and media towards optimizing the number of consumers flipping from Toyota to their brand. But how the overall market will turn out after Toyota is no longer on the front page, one can only guess.

Last week I spoke with my first international client and a good friend. Loved the discussion we had as I realized a major change in the industry that is happening. Let me explain.

The old model is that agencies work on behalf of their clients and use their resources to optimize added value for these clients. But the contracts between agencies and clients didn’t include a lot of incentives for the agencies to really deliver (except for CPP’s which one could argue lowered the quality of media buys). The result was/is that a large part of the R&D budget from agencies go into how to look better instead of how to be better; a subtle difference.

We know that clients and agencies are now including performance based metrics in their contracts, which I believe is appropriate (would love media owners to get on board on this trend as well). But the other change is that agencies will now optimize their own value instead of the clients value. I believe this is a win/win for both the agencies as the clients as agencies understand media better and are better able to increase value, in ways that are not even on the radar of clients (and as such haven’t been implemented – don’t do what your clients can’t understand).

I expect that performance based incentives will slowly create a better incentive for media buys to deliver quality and value instead of buying cheap. And once the demand for quality increases, so will the supply and personally I think we’ll all benefit (media, advertisers, agencies and the consumer).